The euro rose in European trading on Monday against a basket of global currencies, beginning a recovery from a four-week low versus the US dollar and heading toward its first gain in five days. The move was supported by bargain buying from lower levels, alongside growing downside pressure on the US currency amid escalating concerns over the independence of the Federal Reserve, particularly after the US Department of Justice opened a criminal investigation into Chairman Jerome Powell.

With inflationary pressures easing for policymakers at the European Central Bank, expectations for at least one European interest rate cut this year have strengthened. To reprice these expectations, investors are awaiting further key economic data from the euro area.

Price Overview

• Euro today: The euro rose 0.3% against the dollar to 1.1671, from an opening level of 1.1634, after touching a session low at 1.1622.

• The euro ended Friday down 0.2% versus the dollar, marking a fourth consecutive daily loss, after hitting a four-week low at 1.1618, following stronger-than-expected US labor market data.

• Last week, the euro lost 0.75% against the dollar, its second straight weekly decline, amid rising bets on an interest rate cut in Europe this year.

US Dollar

The dollar index fell about 0.3% on Monday, retreating from a four-week high and heading toward its first loss in five sessions, reflecting a broad pullback in the US currency against a basket of global peers.

Beyond profit-taking, the dollar weakened amid renewed concerns over the stability of the Federal Reserve, after US prosecutors formally opened a criminal investigation into Chairman Jerome Powell.

The US Justice Department’s decision to launch a criminal probe into a sitting Federal Reserve chair is unprecedented in US history and has shaken confidence in the independence of US monetary policy.

Analysts argue that the investigation, reportedly related to Powell’s past testimony, puts global financial system stability at risk and threatens to increase market volatility in the period ahead.

For his part, Jerome Powell broke his silence, confirming that he is subject to the criminal investigation and delivering a forceful message to authorities and markets alike, stressing that he will not yield to what he described as intimidation attempts by the Trump administration.

Ray Attrill, head of FX strategy at National Australia Bank in Sydney, said Powell appears to be tired of criticism from a distance and is clearly moving onto the offensive. Attrill added that this open confrontation between the Federal Reserve and the US administration, if Powell’s remarks are taken at face value, is certainly not supportive of the US dollar.

European Interest Rates

• Data released last week showed a slowdown in headline inflation across Europe in December, pointing to easing inflationary pressures at the European Central Bank.

• Following those data, money market pricing for a 25-basis-point rate cut by the ECB in February rose from 10% to 25%.

• Traders adjusted expectations from rates remaining unchanged throughout the year to at least one 25-basis-point cut.

• To reprice these expectations further, investors are awaiting additional euro area data on inflation, unemployment, and wages.

The Japanese yen rose in Asian trading on Monday against a basket of major and minor currencies, beginning a recovery from a one-year low against the US dollar and heading for its first gain in five days. The move was supported by a pullback in the US dollar, driven by renewed concerns over the stability of the Federal Reserve after US prosecutors opened a criminal investigation into its chairman, Jerome Powell.

Yen gains were capped by rising domestic political uncertainty in Japan, after media reports indicated that Prime Minister Sanai Takaichi is seriously considering dissolving parliament and calling early general elections in February.

Price Overview

• Japanese yen today: The dollar fell 0.25% against the yen to 157.52, from an opening level of 157.92, after recording a session high at 158.21, the highest since January 2025.

• The yen ended Friday down 0.7% against the dollar, marking a fourth consecutive daily loss, amid political developments in Japan and positive US labor market data.

• Last week, the Japanese yen lost 0.7% against the US dollar, its second straight weekly decline, due to fading expectations for Japanese interest rate hikes this year.

US Dollar

The dollar index fell about 0.3% on Monday, retreating from a four-week high and heading toward its first loss in five sessions, reflecting a broad pullback in the US currency against a basket of global peers.

Beyond profit-taking, the dollar weakened amid renewed concerns over the stability of the Federal Reserve, after US prosecutors formally opened a criminal investigation into Chairman Jerome Powell.

The US Department of Justice opening a criminal probe into a sitting Federal Reserve chair is an unprecedented step in US history, shaking confidence in the independence of US monetary policy.

Analysts argue that the investigation, reportedly related to Powell’s past testimony, puts global financial system stability at risk and threatens to increase market volatility in the period ahead.

For his part, Jerome Powell broke his silence, confirming that he is subject to the criminal investigation and delivering a forceful message to authorities and markets alike, stressing that he will not yield to what he described as intimidation attempts by the Trump administration.

Ray Attrill, head of FX strategy at the National Australia Bank in Sydney, said Powell appears to be done taking criticism from a distance and is clearly moving onto the offensive. Attrill added that this open confrontation between the Federal Reserve and the US administration, if Powell’s remarks are taken at face value, is certainly not supportive of the US dollar.

Early Japanese Elections

Japan’s public broadcaster NHK reported on Monday that Prime Minister Sanai Takaichi is seriously considering dissolving the lower house of parliament and calling an early general election in February.

The move is seen as a strategic attempt by Takaichi to strengthen her popular mandate and secure a comfortable parliamentary majority to pass the fiscal year 2026 budget and proposed economic reforms, particularly as the current government faces difficulties pushing legislation through a divided parliament.

These reports have heightened political uncertainty among investors, immediately feeding into yen price action in FX markets, as participants assess the potential impact of an early election on future interest rate decisions by the Bank of Japan.

Despite the European Union’s public pledge to sever energy ties with Moscow, new data shows that EU ports remained the largest buyer of Russia’s flagship Arctic liquefied natural gas project throughout 2025.

An analysis of ship-tracking data from Kpler, published on Thursday by the non-governmental organization Urgewald, shows that EU terminals handled 76.1% of total exports from the Yamal LNG facility last year, generating estimated revenues of about €7.2 billion ($8.4 billion) for the Kremlin.

These findings come as the European Union prepares to implement a phased ban on Russian LNG, set to take full effect by 2027. However, the data indicates that the pace of transition remains slow.

In 2025, Yamal LNG accounted for 14.3% of the EU’s total global LNG imports, meaning roughly one in every seven LNG tankers arriving at European ports originated from the Siberian project.

Arctic Fragility and the European Loophole

The Yamal LNG project is located deep in Russia’s Arctic and is a cornerstone of President Vladimir Putin’s strategy to expand Russia’s share of the global super-cooled fuel market. The project, however, faces a critical logistical bottleneck, relying on a highly specialized fleet of just 14 ice-class tankers, known as Arc7 vessels, capable of navigating the frozen Northern Sea Route.

Given the small size and unique nature of this fleet, the project’s commercial viability depends on keeping these ships on the shortest possible routes. By offloading cargoes at European ports such as Zeebrugge in Belgium or Montoir-de-Bretagne in France, the tankers can quickly return to the Arctic for reloading. This function is described as a “logistical lung,” allowing Russia to maintain high export volumes that would be impossible if the vessels were forced to undertake months-long voyages to Asian markets.

Sebastian Roeters, sanctions campaigner at Urgewald, said: “While Brussels celebrates agreements aimed at phasing out Russian gas, our ports continue to act as the logistical lung for Russia’s largest LNG terminal. We are not just customers, but the critical infrastructure that keeps this flagship project alive.”

Regional Import Hubs and the Shipping Backbone

France emerged as the main entry point for Yamal LNG in 2025. A total of 87 vessels delivered 6.3 million tonnes of gas to the French ports of Dunkirk and Montoir, representing about 42% of Yamal’s total exports to the EU.

Belgium’s Zeebrugge terminal ranked second as the single busiest port, receiving 58 vessels—more than the 51 ships that arrived at all Chinese ports combined over the same period.

The logistical backbone of this trade remains largely in Western hands. Two shipping companies—UK-based Seapeak and Greece-based Dynagas—control 11 of the 14 Arc7 tankers currently serving the Yamal project. Together, the two companies transported more than 70% of the volumes destined for the EU last year.

Broader Implications for Industry and Geopolitics

The continued flow of Russian LNG comes at a sensitive moment for Europe’s energy security. While the EU’s 14th sanctions package, adopted in 2024, banned the transshipment of Russian gas to third countries via EU ports, it did not prohibit imports for domestic consumption within the bloc.

Energy analysts believe 2026 will be a pivotal year for the global market, with large volumes of new supply from the United States and Qatar expected to come online, potentially easing price volatility that has made replacing Russian gas so difficult.

Urgewald, however, warns that unless the EU acts to prevent the Arc7 fleet from being transferred into so-called “shadow fleet” structures once current charter contracts expire, Russia may find ways to circumvent the full ban scheduled for 2027.

“We must act now to use our leverage,” Roeters added. “The European Union and the United Kingdom must ensure that the Arc7 fleet does not fall into the wrong hands by the end of the year.”

The European Commission has asked member states to submit energy diversification plans by March 1, 2026, outlining how they intend to replace remaining volumes of Russian gas. While Spain recorded a sharp 33% drop in Yamal imports during 2025, the EU’s overall dependence remains significant, underscoring the difficulty of balancing energy security with geopolitical objectives.

US stock indices rose in Friday’s trading following the release of the monthly jobs report, as investors assessed its implications for Federal Reserve policy.

Data released earlier today showed that the US economy added just 50,000 jobs in December, below market expectations of 73,000, while the unemployment rate declined to 4.4%.

Separately, the US Supreme Court is holding a hearing today to review the legality of tariffs imposed by the Trump administration in April.

In this context, US Treasury Secretary Scott Bessent said Washington would be able to offset any lost tariff revenue should the court rule against the measures.

Meanwhile, Federal Reserve official Steven Miran called for interest rate cuts totaling 150 basis points this year, arguing that such a move is necessary to support the labor market.

In market trading, the Dow Jones Industrial Average rose by 0.6%, or 271 points, to 49,537 by 17:21 GMT. The broader S&P 500 gained just under 0.6%, or 42 points, to 6,964, while the Nasdaq Composite advanced by 0.7%, or 170 points, to 23,650.